Barclays has sounded a warning for anyone moving home who is not a first-time buyer, as new mortgage data reveals a sharp decline in deposit values despite a modest rise in purchase prices. The average deposit contributed by home movers fell by 24.8% year-on-year in June, while the average purchase price for this group increased by just 1.0% over the same period.
Deposit values tumble
According to Barclays Property Insights, the average value of deposits put down by non-first-time buyers dropped significantly compared with the previous year. This means that even though the price of the homes they are buying has barely changed, the upfront cash they are able to bring to the table has shrunk dramatically.
The squeeze is leading more movers to take on larger mortgages to bridge the gap. The proportion of home movers borrowing at more than 75% loan-to-value (LTV) has risen from 18.2% to 22.1% over the past year. This indicates that a growing number of buyers are stretching their borrowing to make up for smaller deposits.
Second-steppers feel trapped
More than a third of prospective second-steppers, 34%, say they feel stuck in their first property because moving on has become too expensive. This sense of being trapped is a key concern for the housing market, as it limits the supply of starter homes and reduces overall transaction volumes.
Interestingly, many recent first-time buyers are already planning their next move cautiously. Some 41% say they will try to keep their next purchase close in value to their current home in order to reduce upfront costs. This suggests that even those who have managed to get onto the property ladder are wary of overstretching themselves in a volatile market.
Barclays experts weigh in
Lee Chiswell, Head of Mortgages at Barclays, commented: “The cost of moving up the ladder is forcing many second-steppers to evaluate how far their deposit can stretch, whether they need additional support from family, and what they need from their mortgage.”
Chiswell added: “At the same time, more buyers are entering the market solo than in previous generations, showing that the desire for independence and long-term security remains strong, even in a challenging market. As housing journeys become more varied, there is no longer a ‘typical’ path onto the property ladder. It's increasingly important that buyers have the confidence and support to make decisions that work for their individual circumstances.”
Rate uncertainty and market outlook
Julien Lafargue, Chief Market Strategist at Barclays Private Bank and Wealth Management, noted that affordability has been gradually improving as pay growth outpaces house prices and interest rates come down from their peak. However, he warned that the outlook is “unusually uncertain”.
“The Bank of England is holding at 3.75% with a divided committee, and the next move looks finely balanced,” Lafargue said. “This alongside elevated policy uncertainty is forcing home buyers to proceed with caution. That said, demand that has paused is waiting rather than gone, and once the rate and policy picture clears, the market appears to have a solid base to build from.”
Implications for the housing market
The combination of falling deposit values, rising LTV ratios, and a high proportion of movers feeling stuck spells a challenging environment for those hoping to trade up. It also raises questions about the long-term health of the property market, as reduced mobility typically leads to fewer transactions and may further distort prices at both ends of the housing ladder.
While the data reflects conditions in June, the underlying trends are expected to persist for the remainder of the year. Prospective movers are advised to carefully assess their finances, consider the impact of interest rate movements, and seek professional mortgage advice before making a move.
